March 6, Dear Ms. Tavenner,

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1 1201 L Street, NW, Washington, DC T: F: Leonard Russ CHAIR Bayberry Care/Aaron Manor Rehab New Rochelle, NY Lane Bowen VICE CHAIR Kindred Healthcare Louisville, KY Robin Hillier SECRETARY/TREASURER Lake Point Rehab & Nursing Center Conneaut, OH Neil Pruitt, Jr. IMMEDIATE PAST CHAIR UHS-Pruitt Corporation Norcross, GA Michael Wylie EXECUTIVE COMMITTEE LIAISON Genesis Health Care Kennett Square, PA Paul Liistro AT-LARGE MEMBER Arbors of Hop Brook Manchester, CT Deborah Meade AT-LARGE MEMBER Health Management, LLC Warner Robins, GA David Norsworthy AT-LARGE MEMBER Central Arkansas Nursing Centers, Inc. Fort Smith, AR Frank Romano AT-LARGE MEMBER Essex Health Care Rowley, MA Tom Coble INDEPENDENT OWNER MEMBER Elmbrook Management Company Ardmore, OK Tim Lukenda MULTIFACILITY MEMBER Extendicare Milwaukee, WI Gary Kelso NOT FOR PROFIT MEMBER Mission Health Services Huntsville, UT Glenn Van Ekeren REGIONAL MULTIFACILITY MEMBER Vetter Health Services Elkhorn, NE Pat Giorgio NCAL MEMBER Evergreen Estates Cedar Rapids, IA John Poirier ASHCAE MEMBER New Hampshire Health Care Association Pembroke, NH Shawn Scott ASSOCIATE BUSINESS MEMBER Medline Healthcare Mundelein, IL March 6, 2014 Ms. Marilyn Tavenner Administrator Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: CMS-4159-P P.O. Box 8013 Baltimore, MD Dear Ms. Tavenner, Re: AHCA Response to Proposed Rule, Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs (RIN 0938-AR37) The American Health Care Association and the National Center for Assisted Living (AHCA/NCAL) represents over 12,245 skilled nursing facilities (SNFs), or million beds, and 157,584 assisted living residence (ALR) beds. The Association represents the vast majority of SNFs and a rapidly growing number of ALRs. Thus, we play a critical role in all Medicarefinanced post-acute care (PAC) and Medicaid-finance long term services and supports service delivery policy and programmatic development, both feefor-service (FFS) and managed care. We appreciate the Centers for Medicare and Medicaid Services (CMS) efforts to provide additional guidance on Part C, which governs Medicare Advantage (MA) Plans but we have a number of ongoing MA and MA-PD concerns which are discussed, below. Additionally, regarding Part D, the framing authority for the Medicare drug benefit delivered by Prescription Drug Plans (PDPs) and Medicare Advantage Prescription Drug Plans (MA- PDs) we are deeply concerned about the proposed changes and must oppose several proposals and offer alternative approaches were possible. Mark Parkinson PRESIDENT & CEO The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) represent more than 12,000 nonprofit and proprietary skilled nursing centers, assisted living communities, sub-acute centers and homes for individuals with intellectual and development disabilities. By delivering solutions for quality care, AHCA/NCAL aims to improve the lives of the millions of frail, elderly and individuals with disabilities who receive long term or post-acute care in our member facilities each day.

2 Our comments are structured as follows: a) context for our comments (page 1); b) overarching comment themes and specific requests of CMS as the Agency finalizes the proposed regulations (page 2); and c) detailed comments section by section which articulate in detail our concerns and recommendations (page 7). Context for AHCA/NCAL Comments AHCA/NCAL analysis shows that in 2012, 36 percent of Medicare discharges from acute care hospitals were referred to post-acute care (PAC) settings. Of the 36 percent, 52 percent of all people referred to PAC received such services in SNFs, making SNFs the dominant PAC resource. 1 AHCA/NCAL research also indicates that, nationally, MA plan enrollment likely will climb to over 33 percent nationally by The Office of Management and Budget as well as the Congressional Budget Office also project continued enrollment growth despite MA payment reductions contained in the Affordable Care Act 2 Already, eleven states (AZ, CA, FL, HI, ID, MN, OH, PA, NY, RI, WI) have over 30 percent of Medicare beneficiaries enrolled in MA plans. In fact, close to 50 percent of Medicare beneficiaries in three states, HI, MN, and OR, are enrolled in MA plans today. Based on the facts, above, the Association is deeply concerned about MA reimbursement for PAC services and related impacts on people and their families. The vast majority of MA plans pay less the Medicare Resource Utilization Group (RUG) levels for care delivered to a population with increasing complex medical care needs. As has been well documented in FFS, Medicare cross-subsidization of Medicaid has historically played an important role in sustaining SNF care. However, with recent Medicare rate reductions, this program no longer fully subsidizes increasing Medicaid shortfalls. Expressed as a shortfall in reimbursement per Medicaid patient day, the estimated average 2013 Medicaid shortfall is projected to be $24.26, which is 8.6 percent higher than the preceding year s projected shortfall of $ Combined 2013 Medicare- Medicaid margins are projected to be negative 3.5 percent. 3 In its analysis, the MedPAC Medicare and Medicaid margin projection shows an average national margin of 1.8 percent; MedPAC analysis also includes private pay. 4 The end result is that FFS rates are producing dangerously thin margins and places access to critical SNF services in a highly unstable position as both Medicare and Medicaid managed care expand bringing with them even tighter margins and additional administrative overhead costs Avalere Health, LLC. Site of Placement Analysis. Prepared for the American Health Care Association. February Jacobson, G., et. al. Projecting Medicare Advantage Enrollment: Expect the Unexpected? Kaiser Family Foundation. Kaiser Family Foundation. June Eljay, LLC. A Report on Shortfalls in Medicaid Funding for Nursing Center Care. January Carter, Carol. Assessing Payment Adequacy and Updating Payments: Skilled Nursing Facility Services. MedPAC December 12, Saucier, P. et. al. The Growth of Managed Long-Term Services and Supports (MLTSS) Programs: A 2012 Update. Prepared for the Centers for Medicare and Medicaid Services. July Additionally, since this report was issued four more states have announced statewide MLTSS efforts. 1

3 Because of such enrollment growth and AHCA/NCAL membership s critical role in the delivery of PAC services, the Association strongly believes that additional guidance as well as increased CMS engagement in plan oversight. Such oversight is critical to protecting Medicare beneficiaries and ensuring an adequate base of high quality providers to support them and their families as well as ensuring these individuals have adequate access to needed medications. We also believe that a serious consideration must be given to the reimbursement impacts on people and critical PAC services which are key to CMS preventable re-hospitalization efforts. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) added a new Part D to the Medicare statute entitled the Medicare Prescription Drug Benefit Program (PDP), and made significant changes to the existing Part C program. The MMA directed that important aspects of the Part D program be similar to, and coordinated with, regulations for the MA program. Generally, the MMA provisions took effect January 1, Today, according to MedPAC, nearly 30 million Medicare beneficiaries were enrolled in Part D in 2012 with 63 percent in stand-alone prescription drug plans (PDPs) and the remaining 37 percent in MA-PDs. Since the inception of both Parts C and D, CMS has periodically revised its regulations either to implement statutory directives or to incorporate knowledge obtained through experience with both programs. Thus, CMS issued interim and final rules in 2008, 2009, 2010, and in the April 2011 final rule, revised regulations on a variety of issues based on the Affordable Care Act. AHCA heralded the addition of Part D for filling a painful gap in health care coverage for older adults and persons with disabilities who are Medicare eligible. The Association worked diligently with CMS to preserve the vital role of the long-term care pharmacy, a much needed institution in providing drugs to people in Medicare-financed PAC SNF stays, as well as for people who are Medicare-Medicaid eligible in Medicaid-financed long-stay nursing center in a safe, effective and timely manner. Since 2006, AHCA has weighed in with comments in response to CMS ongoing issuance of regulations vital to implementing legislation and continuing improvement of the Part D benefit. We continue our participation in improving and protecting Part D with the comments in this letter on CMS Part D proposals and, when appropriate, with specific reference to the needs of nursing center residents who also use Part D. Overarching Comment Themes Below are our overarching themes on the proposed rule. These observations were gleaned from a careful review of the proposed regulations and based on a synthesis of our more detailed comments (see below). 6 Pfeffer, J. The Reason Health Care is So Expensive: Insurance Companies. Bloombergy Businessweek. April 10,

4 Increased MA oversight is positive as long as such efforts do not increase provider administrative burden. With such large numbers of Medicare beneficiaries enrolled in MA plans, particularly the health maintenance organization (HMO) model, it is critical that past problems with the HMO model are prevented. However, such oversight efforts should not impose additional administrative burden on SNF providers already struggling with cumbersome and often duplicative MA-related business processes as well as the long-standing SNF multilayered regulatory requirements. AHCA is deeply concerned about CMS proposed Part D approach. It is feasible that some proposed concepts will aid AHCA/NCAL in achieving its goal of reducing use of antipsychotics and foster appropriate medication management for patients. And, while AHCA agrees that some of these medications may be overprescribed as well as their being overall equivalency in effectiveness, we disagree that with the strategy to limit their use by restricting their inclusion on the formulary. This is a relatively blunt strategy and does not take into consideration differences in side effect profile, drug-drug interactions, and differences in individual metabolism of medications. We believe there are more effective strategies that will not limit access to medications and can help assure more appropriate use of medication and less expensive medication when overall equivalency is found in the literature. New plan costs associated with complying with new requirements should not be passed on to providers in the form of further rate reductions. The Association recognizes CMS position on non-interference in plan-provider contractual negotiations and the proposed regulation pertains to Part D. However, we urge CMS to consider that in Part C, plans typically already pay less than Medicare Resource Utilization Group (RUG) rates and that the administrative costs of delivering critical PAC services under MA plans are higher. In addition to higher administrative cost, prior authorized lengths of stay are typically quite a bit shorter under MA plans, and since many costs are front loaded during a patient s stay, providers ability to cover cost to care for MA participants is already difficult. Furthermore, some MA enrollees have copays, which if unpaid, providers have to absorb since they are not allowable as Medicare bad debts. As MA enrollment grows and provider exposure to unavailable Medicare bad debt grows. This must be considered in tandem with decreasing levels of Medicare bad debt allowed in fee-for-service due to changes included in the Middle Class Tax Relief and Job Creation Act of Such combined reductions will have negative impacts on access as providers face more complex operating and financially challenging environments. Thus, SNFs increasingly will be paid less to deliver services that come with additional administrative burden and costs. Therefore, CMS must provide some form of guidance to plans on the Agency s expectations that plan operating costs and related reductions in MA plan reimbursement should not be passed on to any 3

5 providers, including SNFs, in order to ensure adequate access to services to a growing population Fiscal impacts of the rule coupled with MA payment reductions could result in the survival of only large plans. In its comments on non-interference, CMS makes clear its intent of fostering market forces. The goal of such a competitive marketplace is to offer beneficiaries choice of plan, a variety of plan types, and value. However, the Association is concerned that the new requirements might negatively impact the variety of plans available because of new plan operating expenses coupled with Affordable Care Act (ACA) related payment reductions, Sequester reductions and potential reductions laid out in the 2015 Call Letter and Advance Notice. Specifically, only larger plans may be able to weather such changes leaving beneficiaries and providers with only large health plans with whom to enroll or contract with, respectively. Beneficiary protections are helpful and should be further strengthened. The Association applauds the array of beneficiary protections including the addition of new quality requirements for both Parts C and D and termination of poor performing plans. As the portion of Medicare beneficiaries enrolled in MA plans continue to rise, we strongly encourage that CMS work with beneficiary advocacy groups and health care provider associations to further strengthen such protections. Requests of CMS as the Regulation is Finalized Based upon our review of the proposed rule and existing MA and Part D requirements, we strongly urge CMS to consider the following Association requests as the Agency finalizes this rule and considers future Parts C and D refinements: CMS should fully enforce its MA oversight authority and responsibilities located at Section 1857(e)(i) -- Plan responsibilities that are critical to ensuring people have access to restorative and life sustaining PAC services include prompt pay, timely adjudication of grievances and appeals, timely prior authorization, and payment levels that are sufficient to attract and retain an adequate network of high quality providers as stipulated at Section (a)(1). Regarding payment levels, we respect CMS current position on noninterference located at Section 1860D-11(i) of the Medicare Modernization Act (MMA) but believe CMS could institute guardrails to aid providers struggling with challenging plan business practices and low payment rates (see discussion, below). CMS should not expand passive enrollment of full Medicare-Medicaid eligibles into D-SNP or only do so with clear timeframes. Full Medicare-Medicaid eligible individuals have low health literacy levels and complex health care needs. CMS characterizes passive enrollment as a process by which a beneficiary is informed that he or she will be considered to have made a request to enroll in a 4

6 new MA plan by taking no action. 7 The provisions found at Section (g) are inadequate to ensure such individuals have sufficient information and time to make educated decisions about what they consider to be substantially similar coverage and to determine whether their current providers are in or out of network (OON). If the latter, transfers to in-network providers could prove harmful to the recovery of individuals in a PAC stay or for full duals in a long stay. Finally, if an individual is a current long-stay resident, their current home skilled nursing facility (Section ) should automatically be offered a contract or paid substantially similar payment under the same terms and conditions that apply to similar nursing facilities that contract with the MA organization as is stated in the current code of federal regulations (CFR). Finally, as an additional protection we urge CMS to modify its current requirement found at (f), Basic Benefits, Special Needs Plan Model of Care that potentially covering plans offer the beneficiary a comprehensive initial health risk assessment such that the assessment is conducted as part of the pre-enrollment activities to ensure the D- SNP can deliver needed services. CMS should reconsider its position on noninterference and explore signaling language. In the Medicare Modernization Act (MMA), one word noninterference is the headnote and first word of Section 1860D-11(i) applying to both Parts C and D. The MMA conference report explains that the Secretary is prohibited from taking certain actions for the purpose of promoting the market to decide the outcome of competition. However, AHCA/NCAL strongly believes that a less conservative view of the provision is needed to address critical issues in the MA marketplace and in a rapidly expanding Medicare and Medicaid managed marketplace. We do not believe the drafters anticipated the serious, negative implications of combined Medicare and Medicaid managed care and the downstream impacts on provider capacity to deliver critical services to people in such a challenging environment. Of key importance are challenges with adequate reimbursement to deliver high quality services in Medicare and Medicaid negotiated rate environments which include no guardrails for such negotiations. Other examples of MA plan challenges which should be addressed using its authority located at Section 1857(e)(i) include issues with prompt pay in Medicare and Medicaid managed care, unnecessarily long periods of time to receive prior authorizations, and ill-defined utilization review processes which disrupt care and services. We understand that our comments on Part C, presented below, are not germane to CMS Part D specific comments contained herein but we do believe that CMS has created an opening for a discussion on the underlying noninterference statutory provision by offering clarifying guidance on Part D. Further, separate commentary will be transmitted to CMS on this point. For now, we respectfully request that CMS consider the payments to providers signaling 7 Medicare Managed Care Manual. Revised August 7, Chapter 2 Medicare Advantage Enrollment and Disenrollment. 5

7 language approach used by the CMS Medicare-Medicaid Coordination Office for demonstration participating plans. 8 CMS should ensure that information collection from plan providers does not result in additional provider burden and that such information collection only is used for the purpose of evaluating plan compliance with CMS requirements. In a number of places, ( (i)(2)(i) and (i)(2)(i)), CMS indicates its intent to establish authority to collect information directly from plan first tier, downstream and related entities (FDRs). CMS should approach such information collection and review activities from the perspective of assessing only plan operations and performance in accordance with its authority found at Section 1857(e)(i). Additionally, such reviews should adhere to assessment of existing MA plan related materials and documentation and not to add to the already extensive array of current SNF oversight activities. In addition, related to Part D, use of prescription drug event (PDE) data alone to evaluate appropriate prescribing trends will have the effect of restricting prescribers. We would oppose the following example: Prescribers with a disproportionate number of patients in skilled nursing centers or assisted living centers specialized in certain diagnoses or patient types such as pain or behavior problems will be triggered for possible exclusion when using PDE data only. Without recognizing the location of service or coordination of PDE data with other clinical data, this proposed rule change may discourage physicians from practicing in long term care (LTC) or settings that have high proportion of patient s requiring medications that are under close scrutiny by CMS or the Part D plans. Providers should be held harmless in overpayment or inappropriate payment scenarios. Specifically, SNFs that deliver services in good faith based on plan organization determinations authorizing such services should not be penalized in part of CMS recovery effort or related plan recovery efforts in overpayment scenarios or for incarcerated individuals. The Association strongly supports all beneficiary protections. Despite CMS efforts to ensure clarity and accuracy of marketing materials and other plan information issuances, the membership continues to report challenges with plan practice alignment with CMS requirements and plans own policies. We strongly support the provisions in the proposed rule to further refine and define plan communication with potential and current enrollees. Additionally, while continuity of care is not included in the Part C portion of the regulation, many AHCA/NCAL members are receiving prior authorizations for less than what members believe are appropriate lengths of stay in a PAC setting. Association members have expressed serious concerns about the implications of premature discharge including negative health impacts on people and avoidable 8 Centers for Medicare and Medicaid Services. Joint Rate-Setting Process for the Capitated Financial Alignment Model. FAQs Updated August 9,

8 rehospitalizations. Such plan decisions would appear to be incongruent with CMS requirements at , Interference with Health Care Professionals Advice to Enrollees, and CMS requirements that plans deliver medically necessary services. Under separate cover, AHCA/NCAL will provide more detail on this serious challenge. Detailed Section-By-Section Comments In the following section, AHCA/NCAL provides detailed comments on proposed Parts C and D regulatory changes. A. Clarifications Two Year Limitation on Submitting a New Bid in an Area Where an MA Has Been Required to Terminate a Low Enrollment MA Plan ( (a)(19). AHCA/NCAL supports this provision. We further recommend that CMS employ heightened scrutiny of bids submitted by MAs that have been subject to such terminations for the same area when/if they submit a bid after the two year period to ensure viability of such an offering prevent further disruption of beneficiary services. Authority to Impose Intermediate Sanctions and Civil Monetary Penalties ( , , , ). SNFs are the most heavily regulated health care providers and have long been subject to a wide array of oversight requirements and related sanctions at the state and federal level. CMS proposes two changes to its intermediate sanctions and civil monetary penalties (CMPs) authority. First, pursuant to section 6408 of Affordable Care Act (ACA), CMS proposes to provide for sanctions or CMPs if an Medicare Advantage or Part D sponsor (i) enrolls an individual without prior consent (except in certain limited circumstances) or transfers an individual to a new plan without prior consent, or (ii) violates the Part C and D marketing requirements. Second, existing regulations designate HHS, OIG, as the sole government agency with the authority to impose CMPs for the violations contained in and CMS proposes revisions to clarify that either CMS or the OIG may impose CMPs for the violations listed at (a) and (a), except that only the OIG may impose CMPs for violations under (a)(5) regarding misrepresentation and/or falsification of information furnished to CMS, an individual, or other entity. AHCA has no issue with these proposed changes; but would ask that States be able to use the Federal CMP funds (collected by CMS) to contract with, or grant funds to, any entity permitted under State law, provided that the funds are used for CMS approved projects to protect or improve SNF services for residents, as described in CMS S&C: NH at 0Penalty%20(CMP)%20Funds%20by%20States.pdf. Contract Termination Notification Requirements and Contract Termination Basis ( , ). AHCA/NCAL supports the three revisions to the existing 7

9 regulation which clarify grounds for termination. Furthermore, AHCA/NCAL strongly suggests, based on the authority at Section 1857(e)(i) that grounds for termination should include a clear and persistent pattern of plan non-compliance with CMS requirements including consistent issues with prompt payment which could interfere with service access, clear and persistent pattern of response time that do not comply with terms for adjudicating grievances and appeals as described in Section , and other issues that impact the timely and efficient delivery of services to enrollees such as prior authorizations. In terms of termination, AHCA/NCAL strongly recommends that 90 day notice be provided to all PAC providers as well as to people using PAC. The 45 day standard for notice may be sufficient for non-postacute care users but not for people in a short stay setting. For MA plans that are serving full duals and that also hold a Medicaid contract under which they are delivering Medicaid-financed services to duals should be required to provide 180 day notice to individuals and providers. Reducing the Burden of the Compliance Plan Training Requirements ( (b)(4)(vi)(C), (b)(4)(vi)(C)). Standardized training on communication, particularly among plans and their FDRs is helpful and AHCA/NCAL appreciates CMS recognition of duplicative plan trainings as well as critical recognition of the administrative burden that comes with delivering services under MA plan contracts. However, CMS should include requirements that plans with additional FDR training requirements beyond the CMS standardized trainings are not duplicative and will not result in an unintended increased administrative burden (e.g., CMS standardized training plus any plan-specific training). Regarding CMS request for comment on how plans should be required to continue to communicate information about compliance officers, the Association strongly recommends that plans be required to include such information in contract language with their provider networks and be contractually required to update such information when changes occur. Changes to Audit and Inspection Authority ( (d)(2), (d)(2). In general, AHCA/NCAL supports the notion of an independent plan audit requirement. We believe that triggers for such audits should include a clear and persistent pattern of late payment which could interfere with service access, clear and persistent pattern of response time that do not comply with terms for adjudicating grievances and appeals, and additional items which could impact the timely delivery of critical PAC services such as prior authorizations. The Association requests that CMS clarify the language offered on page 1927, (2) inspect or otherwise evaluate the facilities of the organization where there is evidence of some need for such inspection; and (3) audit and inspect any books, contracts, and records of the organization. The language goes on to note that audited entities could include plan FDRs. Already, SNFs are the most heavily regulated and overseen Medicare providers via Medicare and Medicaid survey and certification and Medicare cost reporting. The Association believes that existing SNF oversight information should be used for such audits if FDRs include SNFs and other direct care providers. CMS should not require any additional reporting or add administrative burden to SNFs. Already, CMS has indicated its 8

10 intention to reduce provider burden in this proposed rule. CMS should adhere to this notion and not inadvertently introduce new burden. Procedures for Imposing Intermediate Sanctions and Civil Monetary Penalties under Parts C and D ( , ). AHCA/NCAL applauds CMS efforts to strengthen beneficiary protections via extension of the test periods. The Association also believes that in addition to the prohibition on auto-enrollment for low-income subsidy (LIS) eligible beneficiaries, the freeze should also apply to passive enrollment of persons who are dually eligible. Specifically, the Association believes that Medicare-Medicaid eligible individuals should not be passively enrolled into an MA or an MA Special Needs Plan (SNP) that is under sanction or in a test period as part of a demonstration or a state developed integrated plan product. Timely Access to Mail Order Services ( ). As the Association understands the proposed changes, CMS seeks to ensure timely delivery of Part D benefits using mail order pharmacies. Specifically, CMS proposes moving from an industry standard of 7 to 10 business days, the rule proposes fulfillment within 5 business days when intervention is required (illegibility, need for coordination, etc.) and 3 business days when intervention is not required. AHCA/NCAL strongly supports this change particularly for Assisted Living Residences. The use of mail order medications is more prevalent in assisted living but also is used by some beneficiaries in long term care nursing centers. Given the complexity of beneficiaries medication regimes and the prevalence of multiple chronic disease coupled with the limited assets of many beneficiaries requiring assisted living or long term care in a nursing center, timely access to medication refills and new medications is critical. We do not want this to supersede state laws and other regulations requiring the timely delivery of medications for beneficiaries residing in skilled nursing facilities or assisted living facilities. In addition, providing unrestricted authority to plan sponsors could shift the current timely and efficient delivery of medications through LTC pharmacies to a mail order requirement for maintenance medications in SNF settings. Required mail order, even if packaging and delivery requirements could be made to comply with CMS SNF guidelines for medication storage and delivery, would be an untenable operational issue resulting in higher nursing costs and potentially making errors more likely. In addition, mail-order often provides large quantities of medications which can cause not just storage issues but increases the likelihood of wastage as well as medication errors, especially when packaging is different. We recommend that CMS not allow plans to require Medicare beneficiaries in a SNF or Assisted living use mail order delivery. Additionally, CMS proposes to relax Part D access requirements in emergencies at Section We offer comment later in this document, but would suggest that CMS further modify this provision as well as include a reflexive change in We suggest such changes allow enrollees who have enrolled in mail order pharmacy programs to use local retail or hospital pharmacies during emergencies which interfere with mail order delivery. 9

11 Not Lawfully Present in the U.S. (417.2, , , , 422.1, , , 423.1, , ). AHCA/NCAL believes that providers which have delivered services under MA organization determinations in good faith should be held harmless. That is, such providers should be paid in a timely fashion for services and should not be subject to retrospective denials, or post-utilization reviews for delivery of services to such individuals for whom the plan issued organization determinations authorizing the delivery of such services (e.g., eligibility verification, prior authorizations, etc.). Part D Notice of Changes ( (g)). This proposed provision is intended to harmonize the requirements applicable to MA and Part D plans by requiring Part D plans to submit to CMS and distribute to beneficiaries the Annual Notice of Changes ( ANOC ) for formularies and cost sharing. AHCA/NCAL supports any CMS or plan effort to better inform Medicare beneficiaries about their coverage options. The Association also requests that plans be required to share such general information with providers such as SNFs and assisted living residence included in plan networks. Greater transparency is critical for both the beneficiary as well as the LTC provider to better coordinate and support the beneficiary in making an informed decision. In addition, a majority of SNF residents are dual eligible, for which plan selection is limited. There has been over a 50 percent decrease in sponsors from 2006 to Plan sponsors continue to consolidate, which leaves fewer options and no efficient way to notify the LTC provider of a beneficiaries ANOC. Without LTC provider s access to ANOCs, the only source of plan change are the family members since many beneficiaries in SNFs or assisted living suffer from dementia limiting their ability to effectively communicate information contained in ANOCs. Separating EOC from ANOC ( (a)(3), (a)(3)). The proposed provision requires separate mailings of plan Evidence of Coverage and ANOC to improve consumer review of these materials. Again, AHCA/NCAL supports any CMS or plan effort to better inform Medicare beneficiaries about their coverage options. The Association also requests that such general information be shared with providers included in plan networks. Agent/Broker Compensation Requirements ( , ). AHCA/NCAL believes that this change will reduce a perverse incentive for brokers to unnecessarily prompt beneficiaries to change coverage and interrupt services while driving up costs. The Association also believes that reduced coverage changes will also provide some relief from the administrative burden associated with enrollees changing plans due to such perverse broker incentives. Drug categories/classes of Clinical Concern ( (b)(2)(v) and (vi). AHCA/NCAL opposes the changes in protected classes. While the Association agrees that some of these medications may be overprescribed as well as their being overall equivalency in effectiveness, we disagree with the strategy to limit their use by restricting their inclusion on formularies. This is a relatively crude strategy and does not take into consideration differences in side effect profile, drug-drug 10

12 interactions and differences in individual metabolism of medications. We believe there are more effective strategies that will not limit access to medications, but that can help assure more appropriate use of medication and less expensive medication when overall equivalency is found in the literature. The Association would welcome the opportunity to provide more detail as requested by CMS. Additionally, the removal of the antidepressant and antipsychotic s class protection will adversely impact low income and dual-eligible beneficiaries. The majority of long-stay SNF patients are low-income, dual eligible beneficiaries. The antipsychotic and antidepressant formulary selection controlled by plan sponsors will trigger unnecessary changes in therapy that will adversely impact well managed patients with these medications and could endanger their stability. An example is when an annual plan auto-enrollment will require mandatory changes in drug therapy without consideration of patient clinical status. Low income dual-eligible beneficiaries do not have the resources to select and/or purchase higher cost plans with broader coverage. Many LTC SNF patients do not have a patient advocate and LTC operators are prohibited from directing patients to specific plans even if it provides better coverage than the auto assigned plan. This proposed change will result in increased cost to SNF operators for non-covered medication previously covered. Medication Therapy Management Program Under Part D ( (d)). AHCA supports the proposed change but strongly believes that plans must coordinate and share information with the primary care providers as well as the PAC or long term services and supports providers (e.g. SNF and ALF) since these providers are delivering restorative or life-sustaining supports and managing the patient/residents diseases and medications. This proposed change will increase the percentage of participants in Medication Therapy Management Program services and could potentially increase positive patient outcomes for these individuals. It would also decrease the amount spent on healthcare, but will require effort on all parties responsible for providing healthcare to the patient. CMS also should allow opportunities to re-evaluate the selection criteria on an annual basis to help ensure that those that would benefit most from the program are enrolled. Business Continuity for MA and Part D plans ( (o), (p). As we understand the proposed change, CMS would requires MA plans, Part D sponsor and PACE programs to develop and maintain business contingency plans in response to natural disasters and emergencies. Considering the nature of PAC and long term services and supports (e.g., people are short term or long term stay are residing in SNFs and/or ALRs), AHCA/NCAL urges CMS to require plans to have policies and procedures targeted to PAC and long term services and supports providers. Additionally, regarding PAC and long term services and supported delivered in disaster unaffected areas but which could be impacted because of plan operation center disaster issues, we request that SNFs and ALRs be specifically noted in the list of providers for which essential functions must be operational within 24 hours. 11

13 Efficient Dispensing in Long Term Care Facilities and Other Changes ( ). AHCA/NCAL s interpretation of this provision is that it is intended to would better protect long term care (LTC) pharmacies from payment arrangements with Pharmacy Benefit Managers that penalize them for more efficient dispensing techniques by adding a clause prohibiting such arrangements. CMS proposed to eliminate a section that had been misinterpreted in a manner that caused LTC pharmacy dispensing fees to be prorated. This would add an additional waiver for short-cycle dispensing requirement for LTC pharmacies using restock and reuse methodologies under certain conditions. In general, AHCA/NCAL supports this proposal but points out that in SNFs this would lead to nursing staff having to re-order short cycle dispensing which could reduce medication availability due to failure in the re-ordering process. AHCA/NCAL supports the prohibition of payment arrangements that penalize the offering and adoption of new and more efficient LTC dispensing techniques. The development of dispensing technologies increases time to for nurses and pharmacist to offer direct patient counseling and other patient MTM services. Allowing Part D plans to introduce payment structures that discourage the use of technology to replace pharmacist pick, pack and ship duties will negatively impact the pharmacy and nursing practice. Since 2007 there has been nearly a 50 percent reduction in the number of Part D sponsors. As plan sponsors continue to consolidate and allowed to place barriers to technology, SNFs will lose operating efficiency and incur higher pharmacy costs which will affect access to needed services by Medicare beneficiaries. Interpreting the Non-Interference Provision (423.10). AHCA/NCAL understands that in this proposed provision CMS seeks to clarify the limits of the non-interference provision in Part D programs. Specifically, the Agency seeks to clearly limit CMS involvement in the competitive market to only those actions that promote competition such as facilitating transparency and information to beneficiaries. It also seeks to clarify that CMS's role in price negotiations is limited to that which it regulates, such as access to network pharmacies and negotiated prices. However, the provision seeks to further limit CMS involvement as to disputes between manufacturers and distribution channel customers over price negotiations but not over negotiations between Part D plans and pharmacies. In the latter context, CMS would only be involved in those business relationships that it is required to enforce such as, among other things, access to negotiated prices and a host of other topics. As to price structure interference, CMS believes that it may not require that Part D prices be based on any particular published or unpublished pricing standard or that there be price concessions using such standards. However, CMS is of the view that it can establish rules for consistent treatment of drug costs in the program. Thus, it proposes to establish definitions for what constitutes a pricing standard, a price concession and how drug costs are to be treated under Part D, including disclosure, bidding availability and reporting, etc. Finally, based on the above, the proposed rule includes a provision that specifies that CMS does not establish drug product pricing standards or the dollar level of price concessions at any stage of the drug distribution channel. 12

14 More broadly, one word noninterference is the headnote and first word of section 1860D-11(i) of the Medicare Modernization Act (MMA) applying to both Parts C and D. The MMA conference report explains that the Secretary is prohibited from taking certain actions for the purpose of promoting the market to decide the outcome of competition. However, AHCA/NCAL strongly believes that a less conservative view of the provision is needed to address critical issues in the MA marketplace. We do not believe the drafters anticipated the serious, negative implications of combined Medicare and Medicaid managed care and the downstream impacts on provider capacity to deliver critical services in such a challenging environment. Of key importance are challenges with adequate reimbursement to deliver high quality services in Medicare and Medicaid negotiated rate environments which include no guardrails for such negotiations. We understand that our comments on Part C, presented below, are not germane to CMS Part D specific comments contained herein, but we do believe that CMS has created an opening for a discussion on the underlying noninterference statutory provision by offering clarifying guidance on Part D. Further, separate commentary will be transmitted to CMS on this point. We understand that our comments on Part C are not germane to CMS Part D specific comments but we do believe that CMS has opened a dialogue on the underlying statutory provision by offering clarifying guidance on Part D. For now, we respectfully request that CMS consider the payments to providers signaling language approach used by the CMS Medicare-Medicaid Coordination Office for demonstration participating plans. 9 Further commentary will be transmitted to CMS on this point at a later date. Pharmacy Price Concessions in Negotiated Prices ( ). AHCA/NCAL understands that CMS is revising the definition of negotiated prices to require that all price concessions from pharmacies are reflected in those prices. This is based on the belief that there has been inconsistent reporting of costs and price concessions by Part D sponsors. We believe that this will positively impacts transparency. AHCA/NCAL supports the notion and would request a similar construction for services delivered under Part C. Any Willing Pharmacy Standard Terms & Conditions ( (a )(8)). AHCA/NCAL understands that this section is in response to concerns about barriers to preferred cost sharing not being offered to any willing pharmacies in the Part D sponsors standard terms and conditions. Here, CMS would make preferred cost sharing for all beneficiaries (if offered by Part D sponsors) in order to ensure fairness to average wholesale price (AWP) pharmacies as well as to expand such structures reach to the long term care, specialty and pharmacy settings. Such changes seek to better clarify cost sharing in the areas of "extended days' supply" and "mail order." AHCA/NCAL believes this is a positive proposed change for community retail pharmacies. This may actually reduce the use of mail order pharmacy in the community which may improve the response rates for prescription fills/refills for 9 Centers for Medicare and Medicaid Services. Joint Rate-Setting Process for the Capitated Financial Alignment Model. FAQs Updated August 9,

15 home patients, improving prescription compliance in that setting. This proposed rule will help eliminate the Part D plan practice of creating favorable pricing relationships with preferred pharmacies leading to the exclusion of smaller or rural pharmacy operators; many of whom service beneficiaries residing in SNFs. This could drive smaller pharmacies out of business creating an access problem for beneficiaries residing in SNFs. Similarly, dispensing technologies to improve nursing efficiency and reduce waste are driven by the smaller innovator pharmacies not the large national providers. However, AHCA/NCAL is concerned that having mail order in the SNF setting would be very problematic. The days supply and ordering process can become more complicated, increase errors and decrease availability making the situation worse than the current situation. The urgent needs of medications would require both mail order and non-mail order resulting in dealing with two different pharmacies with different packaging and different formularies. In addition, providing unrestricted authority to plan sponsors could shift the current timely and efficient delivery of medications through LTC pharmacies to a mail order requirement for maintenance medications in SNF settings. Required mail order even if packaging and delivery requirements could be made to comply with CMS SNF guidelines for medication storage and delivery would be an untenable management scenario resulting in higher nursing costs and increasing the probability of errors. We recommend that CMS not allow plans to require Medicare beneficiaries in a SNF use mail order delivery. Enrollment Requirements for Part D drug prescribers ( (c)(5)). Here, CMS would require physicians to be enrolled in Medicare by January 1, 2015 in order to prescribe prescription drugs covered by Part D. The provision is designed to ensure safety and program integrity by requiring enrollment rather than relying on qualifications to prescribe under state law. It also recognizes that residents and interns can enroll and dispense as well as seeks to recognize the "opt out" provisions in a Parts A and B so that enrollment is only for prescribing purposes. AHCA/NCAL supports this proposed change. This would help ensure that more qualified practitioners are prescribing medications for beneficiaries. The six month window of notification to the prescribers to initiate and complete the enrollment process may be too stringent. A more lengthy notification would increase the likelihood that as many prescribers would complete enrollment as possible. It would also allow the pharmacies to update their records on who is qualified to prescribe Part D drugs. Finally, the provision would also allow the patient more time to seek out a new practitioner if need be. AHCA/NCAL requests clarification on this section. Is CMS proposing a new provider enrollment and approval process for Part D, in addition to the current enrollment for obtaining a Medicare provider number? In addition, how will plan sponsors and pharmacist identify revoked or limited provider status? Without effective and timely notification to pharmacists and LTC providers, retrospective audits could result in payment recovery from pharmacies for providers revoked or without proper enrollment credentials. This will then be billed to providers creating 14

16 additional cost. How would Part D revocation impact Part B billing by the same practitioner? Consideration also should be given regulatory redundancy. It appears CMS will use prescribing trends ( PDE DATA) to determine inappropriate patterns or prescribing are already covered by other state and federal regulations. CMS should default to state and federal rules. We are concerned that this proposal as written could give CMS the right to deny a prescriber authorization based on unpublished rules that CMS alone determines appropriate. Improper Prescribing Practices ( ). In this proposal, CMS would alter its authority to deny (or revoke) Medicare enrollment based on suspension or revocation of DEA certificates and suspension or revocation of ability to prescribe by state authorities. Also, CMS proposes enrollment/revocation power based on objective as well as more subjective grounds relating to patterns or practices of prescribing that are "abusive and a threat to the health and safety of Medicare beneficiaries." AHCA/NCAL supports the concept, but the rule does not provide enough guidance as to what constitutes a pattern of prescribing that is abusive and represents a threat to health and safety. For example, the use of PDE data to identify prescriber trends alone is not sufficient to determine abusive practices. There is no way to distinguish legitimate high dose and frequency of prescriptions from illegitimate prescribing from PDE data. Prescribers may avoid LTC practice for fear of benign revoked from Medicare. Establish Authority to Collect Information Directly from MA and Part D plan FDRs ( (i)(2)(i), (i)(2)(i). In this provision, CMS seeks to permit HHS, Comptroller General and designees to have the right to directly collect, audit, evaluate and inspect any records of FDRs rather than having to go through the plans to gain access to such information. This provision would alter current process of using plans as gatekeepers. CMS should approach such information collection and review activities from the perspective of assessing plan operations and performance only in accordance with its authority found at Section 1857(e)(i). Additionally, such reviews should adhere to assessment of existing MA plan related materials and documentation and not to add to the already extensive array of current SNF oversight activities. Finally, CMS should issue a transmittal to all Medicare providers explaining how such information collection processes will be conducted. Eligibility changes of enrollment of incarcerated individuals (417.1, , , ). In this provision, CMS seeks to require MA plans, PDPs and cost plans to dis-enroll individuals incarcerated for 30 days or more upon notification of such status by CMS. Federal health care benefits are generally allowable when furnished to a beneficiary who is either a U.S. citizen or a U.S. national or to an alien who is lawfully present in the United States. Federal health care benefits are not allowable for services provided to unlawfully present beneficiaries. CMS has specifically implemented a policy that bars Federal payments for health care services provided to unlawfully present beneficiaries in Medicare Parts A and B. Furthermore, an individual is eligible for Part D benefits if he or she is entitled to Medicare benefits under Part A or enrolled in 15